A U.S. citizen or resident who is temporarily present in Canada
during the tax year is exempt from Canadian income taxes on pay for services
performed, or remittances received from the United States, if the citizen or
resident qualifies under one of the treaty exemption provisions set out below.

Income U.S. residents receive for the performance of dependent
personal services in Canada (except as public entertainers) is exempt from
Canadian tax if it is not more than $10,000 in Canadian currency for the year.
If it is more than $10,000 for the year, it is exempt only if:

The residents are present in Canada for no more than 183 days
in any 12-month period beginning or ending in the year concerned, and

The income is not paid by, or on behalf of, a Canadian resident
and is not borne by a permanent establishment in Canada.

Whether there is a permanent establishment in Canada is determined
by the rules set forth in Article V.

You are a U.S. resident employed under an 8-month contract with
a Canadian firm to install equipment in their Montreal plant. During the
calendar year you were physically present in Canada for 179 days and were paid
$16,500 (Canadian) for your services. Although you were in Canada for not more
than 183 days during the year, your income is not exempt from Canadian income
tax because it was paid by a Canadian resident and was more than $10,000
(Canadian) for the year.

Pay received by a U.S. resident for work regularly done in more
than one country as an employee on a ship, aircraft, motor vehicle, or train
operated by a U.S. resident is exempt from Canadian tax.

Income from services performed (other than those performed as
an employee) are taxed in Canada if they are attributable to a permanent
establishment in Canada. This income is treated as business profits, and
deductions similar to those allowed under U.S. law are allowable.

If you carry on (or have carried on) business in both Canada
and the United States, the business profits are attributable to each country
based on the profits that the permanent establishment might be expected to make
if it were a distinct and separate person engaged in the same or similar
activities. The business profits attributable to the permanent establishment
include only those profits derived from assets used, risks assumed, and
activities performed by the permanent establishment.

You may be considered to have a permanent establishment if you
meet certain conditions. For more information, see Article V (Permanent
Establishment) and Article VII (Business Profits).

The provisions under income from employment or income from self-employment
do not apply to public entertainers (such as theater, motion picture, radio, or
television artistes, musicians, or athletes) from the United States who receive
more than $15,000 in gross receipts in Canadian currency, including reimbursed
expenses, from their entertainment activities in Canada during the calendar
year. However, this provision for public entertainers does not apply (and the
other provisions will apply) to athletes participating in team sports in leagues
with regularly scheduled games in both the United States and Canada.

Wages, salaries, and similar income (other than pensions) paid
to a U.S. citizen by the United States or any of its agencies,
instrumentalities, or political subdivisions for discharging governmental
functions are exempt from Canadian income tax.

The exemption does not apply to pay for services performed in
connection with any trade or business carried on for profit by the United
States, or any of its agencies, instrumentalities, or political subdivisions.

A full-time student, apprentice, or business trainee who is in
Canada to study or acquire business experience is exempt from Canadian income
tax on remittances received from any source outside Canada for maintenance,
education, or training. The recipient must be or must have been a U.S. resident
immediately before visiting Canada.

An apprentice or business trainee can claim this exemption only
for a period of one year from the date the individual first arrived in Canada
for the purpose of training.